Gerdau S.A. (GGB)

Distribution of interest on
capital stock with regard to the Preferred Shares as an alternative form of
payment to shareholders that are either Brazilian residents or non-Brazilian
residents, including holders of ADRs, are subject to Brazilian withholding tax
at the rate of 15%. In the case of non-Brazilian residents that are residents
of a tax haven, the income tax rate is 25%. Currently, such payments are tax
deductible by the Company in determining social welfare contributions and
income tax. (See Item 8.A. Financial Information  Interest on Capital Stock).

Distribution of interest on
capital stock with regard to the Preferred Shares as an alternative form of
payment to shareholders that are either Brazilian residents or non-Brazilian
residents, including holders of ADRs, are subject to Brazilian withholding tax
at the rate of 15%. In the case of non-Brazilian residents that are residents
of a tax haven, the income tax rate is 25%. Currently, such payments are tax
deductible by the Company in determining social welfare contributions and
income tax. (See Item 8.A. Financial Information  Interest on Capital Stock).

Distribution of interest on
capital stock with regard to the Preferred Shares as an alternative form of
payment to shareholders that are either Brazilian residents or non-Brazilian
residents, including holders of ADRs, are subject to Brazilian withholding tax
at the rate of 15%. In the case of non-Brazilian residents that are residents
of a tax haven, the

96

income tax rate is 25%.
Currently, such payments are tax deductible by the Company in determining
social welfare contributions and income tax. (See Item 8.A. Financial
Information  Interest on Capital Stock).

Distribution of interest
on capital stock with regard to the Preferred Shares as an alternative form of
payment to shareholders that are either Brazilian residents or non-Brazilian
residents, including holders of ADRs, are subject to Brazilian withholding tax
at the rate of 15%. In the case of non-Brazilian residents that are residents
of a tax haven, the income tax rate is 25%. Currently, such payments are tax
deductible by the Company in determining social welfare contributions and
income tax. (See Item 8.A. Financial Information  Interest on Capital Stock).

Distribution of interest
on capital stock with regard to the Preferred Shares as an alternative form of
payment to shareholders that are either Brazilian residents or non-Brazilian
residents, including holders of ADRs, are subject to Brazilian withholding tax
at the rate of 15%. In the case of non-Brazilian residents that are residents
of a tax haven, the income tax rate is 25%. Currently, such payments are tax
deductible by the Company in determining social welfare contributions and
income tax. (See Item 8.A. Financial Information  Interest on Capital Stock).